India’s broadband airwaves auction to fetch $8.6 billion (Roundup)

New Delhi, June 11 (IANS) With the auction of airwaves for broadband services concluding Friday after 117 rounds over 16 days, the government is set to reap yet another bonanza of $8.6 billion that promises to prune the country’s fiscal deficit even further. Together with the money generated from the auction of airwaves for third generation (3G) mobile phone services, the broadband spectrum auction is set to fetch Rs.106,262 crore to the government, against the Rs.35,000 crore it had expected.

Given the budgeted fiscal deficit of Rs.381,408 crore set for this fiscal, the excess of Rs.71,262 the government will get on account of the auctions of spectrum for broadband and 3G services can prune the fiscal deficit by 18.68 percent.

The race for broadband wireless, however, saw several big telecom players opting out, as the final bid for a pan-India licence fee shot up to Rs.12,847.77 crore, which was 634 percent higher than the Rs.1,750 crore base price.

This is the money two state-run telecom operators - Mahanagar Telephone Nigam and Bharat Sanchar Nigam - will have to also pay to the government, as part of their contract. The two companies have already been allotted the airwaves for broadband

Infotel broadband services won licenses in all the 22 circles into which India has been geographically divided for telecom services. While Aircel bagged seven slots, Tikon got five, Qualcomm and Bharti four each, and Augere emerged winner in one circle.

Interestingly, Mukesh Ambani-led Reliance Industries also announced Friday that the company has acquired a 95 percent stake in Infotel for Rs.4,800 crore (little over $1 billion) to enter the broadband services.

On the other hand, his younger brother’s Reliance Communications and Idea had pulled out of the auction mid way saying they would concentrate on increasing their businesses in the 3G services domain, for which they won the auction for spectrum last month.

Another telecom major Bharti bagged four slots - for Maharashtra, Karnataka, Kolkata and Punjab - for Rs.3,314.36 crore. The company had also bid for all major 3G circles earlier.

“A combination of scarcity of slots and the auction format, once again, resulted in extremely high price levels. The company has secured BWA spectrum in select circles to experiment with new technologies,” said a Bharti statement.

Friday saw the conclusion of 117 rounds of the auction of airwaves for broadband services spread over 16 days. It was a simultaneous online auction for two slots in each of the country’s 22 service areas.

The government has already raised Rs.67,719 crore from the 3G spectrum auction.

Broadband spectrum, or airwaves, is essential for rolling out worldwide interoperability for microwave access, popularly called WiMAX services, that enables hand-held devices and laptops to access the Internet at much faster speeds.

According to the latest information available on the website of the Department of Telecommunications (DoT), Mumbai and Delhi attracted the highest bids — Rs.2,292.95 crore and Rs.2,241.02 crore respectively.